Asymmetric adjustments in the ethanol and grains markets

Chang, Chia‐Lin; Chen, Li-Hsueh; Hammoudeh, Shawkat; McAleer, Michael

doi:10.1016/j.eneco.2012.07.026

Cited by 21 publications

(1 citation statement)

References 19 publications

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“…According to Coffey and Schroeder (2019), farmers tend to use forward pricing and revenue protection insurance in combination [30]. Research articles by Boaitey (2013), Chang et al (2012), Wright (2014), Chen (2016) and others examine the grain market of the case study [31][32][33][34]. According to Chen (2016) study findings the domestic market is inefficient for farmers to distribute their products [33].…”

Section: Introductionmentioning

confidence: 99%

Use of hedging instruments on example of grain market

Abuselidze

2021

20th International Scientific Conference Engineering for Rural Development Proceedings

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The article proves that the discrepancy of regulatory mechanisms of market relations subjects is also typical for the agricultural sector of the economy of Georgia. The problem of price formation for agricultural products is particularly acute. The research determines the need for a scientific approach to solving the issues of improving the domestic commodity market in order to ensure its adequacy for full-scale integration into the world economic space. The theoretical and methodological basis of the research is a systematic approach to the study of the fundamental provisions of the economic theory, risk management theory regarding the problems of using exchange instruments in the agricultural market of Georgia in order to minimize the risks of agricultural products. The authors have identified the main tools for protection against price fluctuations in the exchange agricultural corn market, analysed the ways to use hedging to minimize risks. The main tools of protection against price fluctuations in the exchange-traded agricultural corn market are highlighted, and the ways of using hedging to minimize risks are analysed. Since seasonality, fluctuations in production volumes, and natural and climatic conditions have a great influence on the formation of prices for agricultural products, the combined impact of these factors increases the risks of agricultural business, overcoming their negative impact on business activities in agriculture and determines the need to apply progressive elements of market regulation, including hedging tools.

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Section: Introductionmentioning

confidence: 99%

Use of hedging instruments on example of grain market

Abuselidze

2021

20th International Scientific Conference Engineering for Rural Development Proceedings

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Managing risk in commodity processing using formula pricing contracts: An application to ethanol

Bullock,

Wilson

2024

Agribusiness

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As is the case with many commodity processors, manufacturers of ethanol face considerable margin risk from a wide range of input and output prices and the interrelation of these risks with the technical operational efficiency of the plant. Buyers of ethanol desire greater budget certainty for future ethanol purchases. An approach to pricing that has found considerable use in the livestock, dairy, and milling industries is the use of component‐based formula pricing. This study constructs a Monte Carlo simulation model of a typical South Dakota ethanol plant that uses a formula contract to fix components of the ethanol price. The simulation results indicate that the contract has considerable margin risk management benefits for the ethanol producer. The buyer also achieves marginal risk management benefits but with greater budget certainty as the components are fixed. Additional observations of interest to the industry are drawn from the sensitivity results of the simulations. [EconLit Citations: Q13, G17].

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Asymmetric spot‐futures price adjustments in grain markets

Maynard

Weersink

et al. 2018

Journal of Futures Markets

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Recent volatility in food prices in the grain market has generated much interest among agricultural market participants. This study examines the nonlinear dynamic relationship between spot and futures prices in grain markets. The empirical results provide strong evidence of price asymmetries. The corn spot price adjusts faster to futures price increases than futures price decreases, whereas the soybean spot price adjusts faster to futures price decreases than futures price increases. Although this asymmetric adjustment is found for a single market in Ontario, Canada, the results may also provide insights on the spot‐futures price convergence issues in other commodity markets.

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Asymmetric adjustments in the ethanol and grains markets

Abstract: This paper examines the long-and short-run asymmetric adjustments and pairs trades for nine pairs of spot and futures prices, itemized as three own pairs for three different bio-fuel ethanol types, three own pairs for three related agricultural products, namely corn, soybeans and sugar,

Cited by 21 publications

References 19 publications

Use of hedging instruments on example of grain market

Use of hedging instruments on example of grain market

Managing risk in commodity processing using formula pricing contracts: An application to ethanol

Asymmetric spot‐futures price adjustments in grain markets

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